Sometimes I think that we're going to sophisticate ourselves to death. We get so convoluted in our embrace of techniques and technology, we forget about the basics.
Let's all refresh and recharge, focusing on these five keys to direct marketing success:
1. Build advocates
Advocates are your very best customers. They not only buy from you very heavily but also sell for you by touting your product or service to business colleagues, friends and neighbors.
The objective of any direct marketing effort is not just to get a response or make a sale. It is to build customers. Direct marketing can be used at any stage—separating suspects from prospects, moving prospects to trial, converting one-time buyers to multiple-time buyers, and getting multi-buyers to become advocates.
Not everyone will become an advocate. Direct marketing helps you leverage the 80/20 rule (80% of your business will come from 20% of your customers). It allows you to identify the 20%, reward them to retain them and then clone them.
2. Select the right media
Direct mail is not always the right response medium to use, nor is the Internet. It depends entirely on the profile of your customers/prospects and on the nature of your product.
For example, if you are marketing a truly broad-based product, direct mail will probably not be the way to go. It is too expensive on a per-thousand basis and takes too long to execute. Television will be probably be a better route. Once you have created and produced the spot, the cost of buying television can be as low as $10 per thousand. About the best you can do with direct mail is $300 per thousand.
For niche or micro-markets, however, television normally isn't the best route. For targeting, what works best are direct mail, the telephone and print advertising. If you're selling a product for boat owners, you could rent any one of a number of lists, mail a package and then follow up with a phone call, or you could place an ad in a boat-owner magazine.
Planning and buying media for direct marketing is much different from doing so for general advertising. The objectives are not the same, and fortunately the rates are not the same. In those media exclusively used by direct marketers (mail and telephone), working with someone who understands mailing lists is of the utmost importance. Lists are responsible for 60% of the success of a mailing, so using the wrong one can really hurt your chances of success.
3. Make the right offer
An offer simply means what you're willing to give and what you want in exchange for a particular response from prospects or customers. Included in the offer are price, terms, guarantees and extras. The right offer doesn't necessarily mean the one that generates the most responses or the one that generates the highest profitability from the individual effort; the right offer is the one that ultimately contributes the most to your business.
Offers are normally categorized by the objective of the direct marketing effort—lead generation (for field sales or telephone follow-up), traffic building (to a retail location, trade show booth or Web site) or direct sell to business or consumer markets:
- In lead generation, the decision is how hard or soft the offer should be. Hard offers generate fewer, but more qualified, responses. Hard offers generally will (1) ask prospects for considerably more information about themselves and their buying intentions; (2) ask for an appointment or demonstration; (3) mention the cost of the product or service; and (4) refrain from offering any type of gift or premium.
- Traffic-building offers normally involve premiums, special discounts or exclusives. As an example of the last category, upscale women's stores use a private or preview sale effectively in place of a premium or discount.
- In direct-sell situations, free trials, samples, premiums and discounts can all work to draw attention to your promotion and boost response. And despite their recent bad press, sweepstakes, if handled correctly, can work in your favor. You need not offer $10 million (or even $10 thousand in some circumstances) to increase your response. Whenever possible, offer a guarantee.
Certain offers will help you move customers from being one-time buyers to advocates. Loyalty programs deserve consideration from almost every marketer. Then, depending on your product or service, you can consider offers like automatic shipment, membership clubs and continuity programs.
4. Create advertising that gets response and builds a relationship
You need to break through all the communications clutter in the marketplace. Now comes the hard part: the breakthrough must be done in a way that's credible and in keeping with your product or service.
Example: You can put a photo of a cute baby on the envelope of a direct mail package to get it opened. But if you're selling steaks by mail, you have to tie the product to the baby or you will have attracted attention without paying it off for the reader.
The keys to creating good direct response advertising are understanding the prospect's beliefs and coming up with a strategy to change those beliefs in your favor. The strategy must be based on a differential advantage (a benefit your prospect wants and can't get elsewhere) and your ability to communicate it.
Good direct response advertising involves the prospect. In direct mail, personalization, tokens and rub-offs, stamps, and quizzes all aid involvement. Good direct response advertising also makes it as convenient as possible for a prospect or customer to respond. Use as many vehicles as possible: 1-800 numbers, prepaid reply envelopes, fax numbers, e-mail.
Make sure your advertising unit supports the creative strategy and message. For example, if you're trying to get the top half percent of the population to consider buying luxury vacation homes from you, don't merely send out a flyer offset on cheap paper. Conversely, there are many situations in which one-third-page ads in magazines will bring in as many responses as full-page ads.
5. Analyze response to improve profitability
One of direct marketing's great assets is that it is exquisitely measurable. The ultimate measurement is lifetime value of a customer. This means how much profit a customer contributes over a period of time (usually five years) after the cost of goods and services and promotional expenses.
There are a number of ways to improve lifetime value (other than lowering product/service costs): lowering customer acquisition costs, increasing frequency or duration of purchase and increasing size of purchase.
Being able to measure means being able to improve. But the only way to improve is to test on a continuous basis. The critical factors to test are these:
- The media you use. Will print advertising bring in new customers more cheaply than direct mail? Will they be better customers? Which lists pull the best response?
- The offers you make. Increasing your shipping & handling charge by $1.00 could substantially increase profits because it has no effect on response. A 30-day free trial could substantially increase the number of people who respond… but if your product isn't good, the trial could have a negative effect on profitability.
- The creative approaches you take. What strategy best separates you from your competitors? Should you say it with different words, fewer words and more pictures?
- Your timing. What months are best for you? What's the ideal time between efforts particular prospect and customer groups? How many times should you communicate with a prospect group before you give up?
Key coding and tracking your efforts become as important as anything else you do.